Custom, Excise & Service Tax Tribunal
M/S. Trikoot Iron And Steel Casting Ltd vs Commissioner Of Central Excise, Meerut on 15 October, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 2369-2375 of 2009-EX[DB]
[Arising out of Order-In-Appeal No. 22/Commr./Mrt-I/2009 dated 15.5.2009 passed by Commissioner of Central Excise, Meerut-I]
For approval and signature:
Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Mr. Rakesh Kumar, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Trikoot Iron and Steel Casting Ltd. Appellants
( formerly Tehri Girders Ltd.)
Shri Harbans Lal Goel, Partner
Shri Vaibhav Goel, Partner
Shri Vikas Goel, Director
Shri Himanshu Goel, Director
Shri Subhash Jain Director
Shri Satish Chander Goel, Authorized Signatory
Vs.
Commissioner of Central Excise, Meerut Respondent
Appearance:
Shri B L Narasimhanm Shri Hemant Bajaj Advocate for the Appellants Shri Yashpal Sharma, DR for the Respondent CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Hon'ble Mr. Rakesh Kumar, Member (Technical) Date of Hearing: 22.08.2014 Date of decision: 15.10.2014 ORDER NO. FO/ 53995-54001 /2014-Ex(Br) Per Archana Wadhwa (for the Bench):
All the appeals are being disposed of by a common order as they arise out of same impugned order of the Commissioner vide which he has confirmed the demand of Rs.77,43,635/- against M/s. Tehri Girders Ltd. ( Bharat Steel Rolling Mills Unit No. 2] along with imposition of penalty of identical amount under Rule 25(1) of Central Excise Rules, 2002. In addition, penalties of Rs. One lakh stand imposed on Shri Harbans Lal Goel, Shri Vaibhav Goel, Shri Vikas Goel and Shri Himanshu Goel and Subash Jain, all Directors of Bharat Steel Rolling Mills and Shri Satish Chander Goel, authoriosed signatory of the firm. The Commissioner has further imposed penalty of Rs.25,000/- each on other appellants under Rule 26 (2) of the Central Excise Rules, 2002 for aiding and abetting M/s. Tehri Girders Ltd. in clandestine activities.
2. As per facts on record, M/s. Tehri Girders Ltd.. (previously known as Bharat Steel Rolling Mills and hereinafter referred to as main appellant), are engaged in the manufacture of MS ingots, MS bars and MS angles falling under Chapter 72, out of MS ingots and other re-rollable material used as inputs.
3. Based upon some intelligence that the said appellant was evading the Central Excise duty by suppressing / under-valuing their product and showing huge amounts of other income in their profit and loss account, the balance sheet of the appellant for the period 2003 to 2007 were scrutinized. From the same, Revenue entertained a view that the value adopted by the appellant for their final product was equivalent to the value of inputs and electricity expenses, thus leaving no room for other expenses like salary wages of workers, cost of consumables /stores, cost of maintenance etc. Further, the appellants were showing other income as sales commission, sharing trading and grain trading in their balance sheet, Revenue made further investigation and approached the persons, who gave the cheque on account of sales commission as also on share trading and grain trading. It seems that almost all the said persons accepted the fact of giving sales commission and share trading income to the appellant. However, the Revenue further approached the persons for whom the said activities made and they denied having known the appellant or having any direct dealing with the appellant.
4. On the above basis, Revenue entertained a view that the appellant was suppressing the value of their final product as also were indulging in clandestine clearance of their final product and the income generated from the said activities was being reflected by them in their balance sheet as share trading or grain trading or sales commission income.
5. In view of the above, proceedings were initiated against the appellant by way of issuance of show cause notice dated 27.2.08 alleging under valuation / clandestine activities against the said main appellant and proposing confirmation of demand of duty of Rs.77,43,635/- along with confirmation of interest and imposition of penalties. The notice also proposed imposition of penalties on the Director of the appellant and their authorised representative and on other firms on the allegation of playing active part in abetting the evasion of Central Excise duty by way of providing fictitious entries of profit to the appellant.
6. During the course of adjudication, the appellants vehemently contested that no evidence stand produced by the Revenue either to reflect upon under valuation of the goods or alleged clandestine activities. The entire case of the Revenue is based upon the assumption and presumption and no investigation for arriving at the assessable value of the goods stand made by them. There is no evidence on record to show that the market value, at which the goods have been sold was not the actual price of the goods and there is some underhand consideration received by them from their buyers. They also contested Revenues allegation that income earned by them from sales commission and share trading as reflected in their books of accounts is income on account of clandestine activities. They pleaded that their books of accounts were being duly audited by the statutory authority and Income tax department has accepted other income by way of Commission etc. In such a situation, it is not open to the Central Excise department to challenge the audited financial accounts and records of the company. For the said proposal, they relied upon the Tribunals decision in the case of M/s. R A Casting Pvt. Ltd. Final Order No. 356-372/2008 dated 19.6.08.
The demand was also contested on the ground that all the persons who have given the cheque to the appellant for the said trading / commission activities, have accepted the appellants role and having given them their dues by way of cheques. If the said persons clients have further not accepted the fact of having received the services from the appellant, their statements cannot be made the sole ground, for arriving at an adverse finding, without summoning the said persons for the purpose of cross examination. It was the appellants stand that there is no evidence on record showing the huge procurement of raw material required for manufacture of their final product, there is no evidence relating to the transport of said clandestinely cleared goods and there is no identification of the buyers etc. as also the receipt of consideration from them so as to establish the fact of clandestine activities. They in support of their pleas referred to various decisions of the Tribunal as also of High Courts.
7. Countering the arguments learned DR Shri Yashpal Sharma drew our attention to the finding of the adjudicating authority and submitted that the investigations conducted by the Revenue revealed that the entries made in the balance sheet were not genuine entries inasmuch as the persons for whom the appellants have acted as sales commission agent or the trader have refused to identify them. Shri Sharma though fairly agrees that though the persons who have given the cheque to the appellant as sales commission have agreed to have done so, but the Revenue further approached their clients who refused to recognize the appellant or having acted through them. In respect of the other income like share trading, Revenue investigations have revealed that M/s. D N Kansal Securities Pvt. Ltd. were not in existence at the given address and in respect of grain trading income, the persons admitted to have taken cash from the appellant in lieu of cheque given by them. All these facts reflect upon only one situation that the appellant was indulging in clandestine manufacture and clearance of their final product, without payment of duty and the profits made by them on the said count, stand reflected in their balance sheet, in the shape of sales commission, trade commission or share trading etc.
8. After having carefully considering the submissions made by both the sides, we find that the Revenues entire case is based upon the investigations conducted by them in respect of entries made in the balance sheet. The said entries reflect income of the appellant made through other business like share trading, sales commission and trade commission. The appellant contention is that the persons who have paid them the said commissions have agreed to have done so, The Revenue instead of accepting their stand have further gone to the clients of the said persons who has refused to recognize the appellant.
9. It is not disputed facts on record that income reflected in the balance sheet stand duly audited by the statutory authorities and assessed by the Income Tax department. While dealing with the said aspect, Commissioner has observed that though as per the order of Commissioner (Appeals) of Income Tax dated 12.9.2007, income from share transactions has been accepted as other business income, the said fact will not be of any help to the appellant inasmuch as investigations conducted by the Central Excise department have shown the said income to be fraudulent and fictitious and the said fact was not before Commissioner (Appeals), Income Tax.
We do not agree with the above finding of the adjudicating authority. First of all, we would like to observe that Central Excise authorities have no jurisdiction to interfere in the appellate orders passed by Income Tax authorities and to hold that transaction which stand accepted by the Income Tax authorities were not genuine transactions. The Tribunal in the case of R A Casting Pvt. Ltd. vs. CCE, Meerut I[2009 (237) ELT 674 (Tri) has dealt with an identical question. By referring to the Honble Gujarat High Court decision in the case of Arabian Express Line Ltd. vs. Union of India [1995 ITR 31, it stand held by the Tribunal that law does not entitle the Revenue to disregard all the statutory excise records as well as audited financial accounts and records of the assessee-company, which have been duly verified and accepted by the competent authorities from time to time not only for central excise but also for purposes of income tax etc. It was further held that the Central Excise authorities have no jurisdiction to examine or determine whether the share transaction of the assessee company are genuine or not and whether the income from share trading duly verified, accepted and assessed to income tax authorities could be disregarded by them so as to treat the same as proceeds of ingots alleged to have been clandestinely produced and sold by the appellants. The entire action of the Revenue was held to be without jurisdiction.
The said decision of the Tribunal in the case of R A Casting P. Ltd. stand confirmed by the Honble Allahabad High Court, when the appeal filed by the Revenue was rejected, reported as CCE, Meerut-I vs. R A Castings Pvt. Ltd. [2011 (269) ELT 337 (All). Further, the appeal by the Revenue before the Honble Supreme Court also stand rejected as reported 2011 (269) ELT A 108 (SC). The said decision of the Tribunal was followed in the case of Commissioner of Customs and Central Excise vs. Venus Alloys Pvt. Ltd. [Final Order No. A/348/2012-Ex(DB) dated 20.3.2012] as also in the case of R K Polytubes & ors. Vs. CCE Raipur [ Final Order No. A50276-50277/2014 Ex(DB) dated 17.1.2014.
10. Apart from the above, we note that there is virtually no evidence produced by the Revenue as regards the clandestine manufacture and clearances of appellants final product. It is well settled law that the allegation of clandestine manufacture and removal are required to be proved by production of sufficient evidence in the shape of production of raw material, the actual manufacture of the goods, transportation of the same or in the shape of identification of the buyers. There is no statement of any persons indicating or admitting that income as reflected in the appellants balance sheet stand derived from clandestine activities of manufacture and clearance of their final products. Infact we find that where the excess income not even entered in the balance sheet so surrendered by an assessee to the income tax authorities, it stand held by various Courts that same cannot be attributed to regular business of appellant unless there is evidence to that effect. Reference in this regard can be made to the Tribunals decision in the case of CCE Ludhiana vs. Zoloto Industries [2013 (294) ELT 455 (Tri-Del)] as also Punjab and Haryana High Court decision in the case of CCE, Ludhiana vs. Mayfair Resorts [2011 (22) STR 263 (P&H).
11. Inasmuch as in the present case, there is not even an iota of evidence to indicate that excess income reflected by the appellant in their balance sheet and the other statutory records, which also stand assessed by the income tax authorities, was relatable to the manufacturing activities of the appellant. In the absence of any evidence and in the light of various decisions referred supra, we find no merits in the revenues stand. Accordingly, the impugned order is set aside and all the appeals are allowed with consequential relief to the appellants.
(Pronounced in the open court on 15.10.2014 )
( Archana Wadhwa ) Member(Judicial)
( Rakesh Kumar ) Member(Technical)
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